Landrieu urges FERC to reject pipeline closure proposal

Apr. 1, 2014

Mary Landrieu

Written by

Sen. Mary Landrieu, D-La., is asking the Federal Energy Regulatory Commission to reject an application to abandon the Midla pipeline, which provides natural gas to thousands in eastern Louisiana and parts of Mississippi.

The application was filed by American Midstream (Midla) LLC, which is owned by a ArcLight Capital, a $10 billion hedge fund based in Boston.

“It is my understanding that the American Midstream abandonment proposal could result in at least a doubling of an average homeowner’s monthly utility bill. This is simply unacceptable and is an outright violation of the public interest standard of the federal Natural Gas Act as administered by FERC,” Landrieu wrote in her letter.

It also provides natural gas to the towns of Jonesville, Ferriday, Sicily Island, Vidalia, Slaughter, Clayton and Natchez, Miss., among others.

Atmos Energy, the area’s largest provider of natural gas, also could be impacted if the pipeline is abandoned.

Midla wants to abandon the pipeline or force customers to pay substantial rate increases to build a new $200 million pipeline. Officials estimate the rate increases could increase between five and 15 times as much as people are currently paying.

Landrieu is the Senate’s leading voice on energy issues and serves as the chairwoman of the Senate Energy Committee.

She is asking that FERC reject the proposal in part because of the rate increases and in part because the company has asked for a shortened time frame during which customers can file objections.

Midla is asking to shorten the typical 60-day intervention period during which customers can intervene in FERC’s proceedings to just 10 days. Landrieu wants at least 30 days and for Midla’s requested July 1 deadline for FERC’s decision to be extended.

“The deadlines Midla proposes for FERC consideration of their application are so tight that they fundamentally compromise the due process rights of the affected communities,” Landrieu wrote.

(Page 2 of 2)

Midla bought the pipeline for about $105 million in 2013. Just six weeks after purchase in May, Midla began asking for steep rate hikes to replace the pipeline, citing safety concerns. The company wrote in a fact sheet sent to customers that repair was not an option because the line was 87 years old.

After failing to secure long-term contracts because of the proposed rate increases, Midla wrote to its customers the company would begin abandonment procedures.

“Midla has a hard time believing that FERC will place life, property or the environment at risk by forcing Midla to continue service utilizing a pipeline whose integrity cannot be assured,” Midla wrote in its fact sheet, going on to add it can’t afford to replace the line itself.

Lawmakers like U.S. Rep. Vance McAllister, R-Swartz, and state Sen. Robert Adley, R-Benton, believe Midla is motivated less by safety and more by profits. They say the pipeline has never had any major safety problems.

Adley authored a bill that would turn interstate pipelines into intrastate pipelines should a company attempt to abandon the line. The state’s Public Safety Commission would then have the final say on whether parts of the pipeline that fall within Louisiana can be abandoned.

The bill also would require the company to pay for alternative plans to provide gas to customers.

Adley’s bill passed the Transportation Committee last week and will be heard before the full state Senate this week.